Microsoft has taken drastic action by laying off 1,600 employees in its Xbox division. This policy is part of a major restructuring effort by the company aimed at restoring the health of its gaming business line amid mounting economic pressure.
Xbox CEO Asha Sharma openly admitted in an internal memo that Xbox's current business condition is far from ideal. She highlighted that the profit margins recorded by Microsoft's gaming division lag far behind, being roughly 3 to 10 times lower compared to similar game publisher or platform companies in the global market.
This efficiency measure is part of Microsoft's global workforce reduction strategy, which affects approximately 4,800 employees. In addition to staff reductions, management decided to spin off four previously acquired development studios as an operational adjustment for this fiscal year.
On the other hand, the gaming console industry is currently facing severe challenges due to surging hardware component prices. Production cost pressures have made competition with main rivals like Sony's PlayStation and Nintendo Switch increasingly fierce and difficult to win.
Despite making a massive investment by acquiring Activision Blizzard for $69 billion to strengthen its ecosystem, Microsoft admitted that the growth of its gaming and streaming services has not yet met set expectations. This restructuring step is expected to bring efficiency so the company can remain competitive in the long run.
